§1936 Beginning Farmer or Rancher and Socially Disadvantaged Farmer or Rancher Contract Land Sales Program

Summary

Guarantees loans that private sellers make to qualified beginning farmers or socially disadvantaged farmers who buy a farm or ranch under a contract land sale. The buyer must own and run the farm when the sale is completed, have a credit history showing satisfactory repayment that the Secretary finds acceptable, prove they cannot get enough credit without a guarantee, and the loan must meet the Secretary’s underwriting rules. The buyer must put at least 5% down, and the purchase price or appraisal cannot be more than $500,000. The guarantee lasts 10 years from the date it is given. A seller may choose a prompt payment plan that covers either 3 amortized annual payments or an amount equal to 3 annual payments (including taxes and insurance for that period), or a standard plan that covers 90% of the unpaid principal. To use the standard plan, the seller must use a commercial lender or similar escrow agent, or another arrangement approved by the Secretary. The Secretary may phase in these changes, but all must be in place for Fiscal Year 2011.